Logitech Falls 13% in 6 Months: Should You Hold or Fold the Stock?

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What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value Score

Value investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth Score

Growth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Logitech (LOGI)

Based in Switzerland, Logitech International S.A. is the parent holding company of Logitech. The company is a global leader in peripherals for personal computers and other digital platforms. It develops and markets innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices.

LOGI is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 16.71; value investors should take notice.

For fiscal 2025, five analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.20 to $4.63 per share. LOGI boasts an average earnings surprise of 32.5%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, LOGI should be on investors' short list.

Zacks Investment Research

Immersion Corporation IMMR is expected to report third-quarter 2024 results this week.

The Zacks Consensus Estimate for revenues is pegged at $10.13 million, suggesting a 6.9% year-over-year increase. The consensus mark for earnings stands at 15 cents per share, unchanged over the past 60 days, implying an impressive 87.5% surge from the year-ago figure of 8 cents.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

As a leading developer and licensor of touch feedback (haptic) technology, Immersion has shown a consistent performance in surpassing earnings expectations. The company’s earnings have topped the Zacks Consensus Estimate three times in the past four quarters, with an average surprise of 50.6%.

Immersion Corporation Price and EPS Surprise

Immersion Corporation price-eps-surprise | Immersion Corporation Quote

Factors Shaping IMMR’s Upcoming Results

Immersion’s third-quarter performance is likely to have benefited from the rising demand for its haptic technology across key sectors such as gaming, automotive and consumer electronics. The push for enhanced user experiences, propelled by new product launches and strategic partnerships, is likely to have bolstered sales of its patented solutions.

The increasing adoption of virtual reality (VR) and augmented reality (AR) technologies, which rely on haptic feedback for immersive experiences, may have driven demand for Immersion’s offerings. Revenue growth in the to-be-reported quarter is also expected to have been supported by expanded licensing agreements and royalty income from prominent OEMs (original equipment manufacturers) in these emerging tech markets.

Immersion’s strategic initiatives aimed at broadening its product range and entering new markets, coupled with efficient cost management, could have enhanced operational efficiency and improved profit margins. The company’s focus on expanding its intellectual property (IP) portfolio and securing new licensing deals is likely to have played a pivotal role in boosting revenue and earnings growth in the third quarter.

Immersion’s Price Performance & Valuation

Year to date (YTD), shares of Immersion have soared 22.4%, outperforming the Zacks Computer - Peripheral Equipment industry’s decline of 35.7%. The IMMR stock has also outperformed other players in the space, including Logitech LOGI, TransAct Technologies TACT and Identiv INVE, which have registered a decline of 18.7%, 42.1% and 54.2%, respectively, YTD.

YTD Price Return Performance

Let’s look at the value Immersion offers investors at the current levels. IMMR is trading at a premium with a forward 12-month P/S of 6.15X compared with the industry’s 0.53X, reflecting a stretched valuation.

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

If you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.

As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Logitech (LOGI)

Based in Switzerland, Logitech International S.A. is the parent holding company of Logitech. The company is a global leader in peripherals for personal computers and other digital platforms. It develops and markets innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices.

LOGI is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. LOGI has a Growth Style Score of B, forecasting year-over-year earnings growth of 7.8% for the current fiscal year.

For fiscal 2025, four analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.15 to $4.58 per share. LOGI boasts an average earnings surprise of 32.5%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, LOGI should be on investors' short list.

Zacks Investment Research

For Immediate Release

Chicago, IL – October 29, 2024 – Today, Zacks Equity Research like Logitech LOGI, Mercury Systems MRCY, Immersion IMMR and TransAct Technologies TACT.

Industry: Computer Equipment

Link: https://www.zacks.com/commentary/2358253/4-stocks-in-focus-from-a-prospering-computer-peripheral-industry

The Zacks Computer-Peripheral Equipment industry players like Logitech, Mercury Systems, Immersion and TransAct Technologies are well-poised to benefit from the growing demand for professional gaming accessories, touchscreen and wireless devices, smart glasses and RFID (Radio Frequency Identification) solutions. A continuously improving shipment of personal computers (PCs) bodes well for PC peripheral market prospects. Moreover, the solid demand for 3D-printed health equipment like face shields, nasal swabs and ventilator parts has been a tailwind.

However, the industry has been suffering from macroeconomic headwinds, including inflationary pressures and high interest rates. These have induced sluggishness in IT spending, affecting the demand for computer peripherals. The industry is also showing signs of struggle as demand for remote working and online learning-related computer peripherals has slowed in the post-pandemic era.

Industry Description

The Zacks Computer-Peripheral Equipment industry comprises companies offering computer input, output and storage devices. These include keyboards, mice, LCD panels, smart glass, analog to digital imaging solutions, touch sensors, 3D printers & additive manufacturing and transaction-based printer products, among others.

Moreover, video gaming accessories, including gaming mice, wired gaming headsets, in-ear gaming headphones and controllers for Xbox One and Playstation, are offered by these companies. The highly competitive nature of the industry is encouraging participants to come up with innovative and relevant products to meet the current demand trend. This is strengthening their product portfolios.

Trends Shaping the Future of the Computer-Peripheral Equipment Industry

A Shift in Consumer Preference Acts as a Key Catalyst: The gradual shift in consumer preference from mobile gaming to a more professional gaming experience is a major growth driver. The launch of advanced gaming devices and the rising popularity of e-sports leagues are expected to boost prospects. E-sports is also likely to continue aiding the total addressable market in the gaming peripherals industry.

The 3D printing market presents a favorable long-term investment opportunity as many engineers, designers, architects and entrepreneurs resort to 3D solutions for primary designing and product modeling. Also, increasing demand for gaming equipment and 3D-printed medical equipment are the major driving forces for this industry’s prospects.

PC Market Recovery to Aid Growth: Recovery in PC shipment will aid the industry’s growth as PCs are the main sales booster for computer peripheral products. During the third-quarter 2024 PC shipment data release, Mikako Kitagawa, Director Analyst at Gartner, stated that the industry continues to recover, with demand expected to improve further by the end of 2024, and will witness more robust growth in 2025.

Much of the growth in 2025 is likely to be motivated by the PC refresh cycle driven by the end of Windows 10 support. Another major booster for the PC industry is expected to be the growing demand for AI-enabled PCs. The research firm projects that worldwide shipments of AI PCs will increase by 165.5% to 114 million units in 2025. These projections bode well for the Computer-Peripheral Equipment industry’s growth prospects.

Expanding Global Footprint: The expansion of the total addressable market bodes well for the industry participants. Deepening penetration into price-sensitive regions like the Asia Pacific and the Middle East & Africa through low-cost quality products boosts growth prospects.

Macroeconomic Headwinds Might Hurt IT Spending: Still-high interest rates and protracted inflationary conditions are hurting consumer spending. On the other hand, enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This does not bode well for the Computer-Peripheral Equipment market’s prospects in the near term.

Elevated Operating Expenses to Hurt Profitability: To survive in the highly competitive computer peripheral market, each player is aggressively investing in research and development to enhance their product portfolio and broaden their capabilities. Moreover, companies are looking to improve their sales and marketing capabilities, particularly by increasing their sales force. Elevated operating expenses to capture more market share are likely to dent margins in the near term.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Computer-Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #70, which places it in the top 28% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates robust near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential.

Given the bright industry outlook, a number of stocks are worth watching. However, before we present the stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags Sector & S&P 500

The Zacks Computer-Peripheral Equipment industry has underperformed the S&P 500 composite and the broader Zacks Computer and Technology sector in the trailing 12 months.

The industry has declined 20.4% during this period. Meanwhile, the S&P 500 and the broader sector have risen 39.4% and 48.5%, respectively, over the same time frame.

Industry's Current Valuation

On the basis of the forward 12-month price-to-sales (P/S), which is a commonly used multiple for valuing computer peripheral stocks, we see that the industry is currently trading at 0.59X compared with the S&P 500’s 5.12X and the Zacks Computer and Technology sector’s 6.20X.

Over the last five years, the industry has traded as high as 5.36X, as low as 0.32X and at the median of 0.74X.

4 Computer-Peripheral Equipment Stocks to Watch

Logitech: It is a global leader in peripherals for personal computers and other digital platforms. This Zacks Rank #2 (Buy) company develops and markets innovative products in PC navigation, Internet communications, digital music, home entertainment control, video security, interactive gaming and wireless devices. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Logitech’s strong first-quarter fiscal 2025 results have boosted investors’ confidence in its recovery from the post-pandemic downturn. The latest results marked the second consecutive quarter of year-over-year sales growth after two and a half years of downturn post-pandemic-driven boom.

Increasing hybrid work trends are likely to boost demand for its video collaboration, keyboards & combos and pointing device tools. Thriving cloud-based video conferencing services continue to be its key catalyst. The rising adoption of new mobile platforms in both mature and emerging markets should fuel the demand for its peripherals and accessories. Its partnerships with cloud providers like Zoom Video, Microsoft and Google are major upsides.

The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 15 cents in the past seven days to $4.58 per share. Logitech shares have increased by 4% over the past year.

Mercury Systems: It is one of the world’s leading providers of sensor and safety-critical mission processing subsystems. The company’s products and solutions are used for various critical aerospace, defense, commercial aviation and intelligence programs.

Mercury Systems is benefiting from modernization in radar, electronic warfare and C4I, which is providing it with new opportunities in weapon systems, space, avionics processing, mission computing and embedded rugged services. Domain expertise in analog and digital integration has helped it build a solid long-term relationship with defense prime contractors.

The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company’s fiscal 2024 bottom line is currently pegged at a loss of a penny and has remained unchanged for the past 30 days. MRCY stock has declined 5.9% in the past 12 months.

Immersion: The company develops hardware and software technologies that enable users to interact with computers using their sense of touch. Their patented technologies, which are branded TouchSense, enable devices such as mice, joysticks, knobs and medical simulation products to deliver tactile sensations that correspond to on-screen events.

Immersion is a small company with a market cap of around $279 million. However, it is seeing solid growth because of its innovative technology and new customer wins. This Zacks Rank #3 company focuses on four application areas — computing and entertainment, medical simulation, professional and industrial, and three-dimensional capture and interaction.

The Zacks Consensus Estimate for 2024 earnings has remained unchanged at $1.96 per share in the past 60 days. IMMR stock has soared 37.7% in the past 12 months.

TransAct Technologies: The company designs, develops, manufactures and markets transaction-based printers and related products under the ITHACA, MAGNETEC and TRANSACT.COM brand names. This Zacks Rank #3 company focuses on five vertical markets — point-of-sale, gaming and lottery, financial services, kiosks and the Internet.

TransAct Technologies is benefiting from the growing demand for its products and services amid accelerated digital transformation and business automation across organizations. The company's printers are trusted worldwide to provide crisp, clean transaction records from receipts, tickets and coupons, register journals and other documents.

The Zacks Consensus Estimate for the 2024 bottom line has remained unchanged at a loss of 26 cents per share in the past 60 days. The stock has plunged 30.7% over the past year.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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